``We are still in the process of computing investors who have availed of section 54EA benefit since last year but there have been bulk investments from investors under this category,'' said a source at UTI. Under section 54 EA, investors avail of tax break by investing money arising out of sale of long-term capital assets in specific debt instruments with a lock-in of three years. While bonds also offer tax concession under section 54EA, what is driving investors to MIPs is the added advantage of indexation.

``The indexation benefit helps further reduce your tax burden. For instance, if you are invested in the cumulative plan of MIP, the indexation benefit will help reduce your effective tax payout from 20 per cent to around 14 per cent,'' said an analyst. While a number of income funds offer tax concessions under section 54EA, an assured return for five years is what is driving investors to monthly income plans of UTI.

``Earlier, investors used to put money in US '64 to take advantage under section 80M. Now, they have turned to MIPs for tax break under section 54EA,'' quipped a fund manager. ``Chola's monthly income plan also seems to have attracted money from a few bulk investors who wanted to avail tax benefit under section 54EA since the fund mobilised Rs 60 crore in just three days,'' said an analyst. UTI had initially launched its MIPs for certain category of investors like retired personnel, widows and handicapped people who were in need of a regular income. However, they have now emerged as a new haven to save on tax. ``MIPs seem to have lost their social objective,'' said a Mumbai-based fund manager.

Besides, assured return schemes have emerged as cash cows for UTI, next only to US '64 since money is hardly flowing in the institution's equity funds. Since January, 1995, the nine equity plans from UTI including equity-linked saving schemes have managed to raise close to Rs 800 crore, including Index and Master Value funds launched this year. The Primary Equity Fund in 1995 was the biggest garner with a mobilisation of Rs 160 crore.

On the other hand, income plans in the same period have attracted Rs 12,000 crore. This includes Rs 150 crore in the Bond Fund and Rs 100 crore in US '95, which did not assure any returns. It means that assured return schemes have gathered approximately Rs 11,500 crore in the last three years. "Since MIPs can invest upto 20 per cent of their corpus in equities, a conservative Rs 2000 crore would have flown in equities from MIPs in this period against Rs 800 crore through pure equity schemes,'' said an analyst.